Honduras Economic Outlook
Economic growth slowed but remained robust at 3.2% in annual terms in Q4, driven by increased private and public spending amid strong remittances and credit availability. In addition, the external sector’s contribution improved, with exports increasing and imports falling. However, investment plummeted at a double-digit rate. Turning to Q1, economic activity growth in January–February was slightly faster than in Q4, spurred by the hotels and restaurants, finance and construction subsectors. Additionally, strong remittances inflows through the quarter should have propped up private spending despite high inflation. Regarding Q2, the economy is likely to decelerate compared to Q1 due to the weaker performance of trading partners and the likely cooling of the U.S. labor market, which may limit the inflow of remittances and thus private consumption.
Inflation came in at 7.4% in April, falling from 9.1% in March. FocusEconomics panelists see inflation cooling later this year, albeit remaining above the Central Bank’s target range of 3.0–5.0%. Important factors to watch include unanticipated changes in government subsidies, extreme weather events and unexpected swings in commodity prices.